In the past few years several studies on the impact of P2P music file sharing on recorded music sales were published. They came to very different and even conflicting results, as I highlighted in a 25 part blog series. A recently published study now shifts the focus from file sharing to music video online streaming. R. Scott Hiller of Fairfield University and Jin-Hyuk Kim of University of Colorado Boulder analysed the sales displacement effect of YouTube in a paper entitled “Online Music, Sales Displacement, and Internet Search: Evidence from YouTube“. They concluded that Warner Music Group sold significantly more units of its Billboard 200 albums, when the Warner content was removed from YouTube due to a conflict on licensing fees. In addition, they found no evidence that the blackout had a negative promotional effect for Warner artists.

You can read more about this study and my assessment of the results here:

The Beggars Group chairman, Martin Mills, recently told the Guardian that “(…) 22% of the label group’s digital revenues came from streaming – and that the majority of its artists earn more now from track streams than track downloads” in 2012. Though the article does not report absolute figures, the revenue can be considered rather high with a roster including Adele, Jack White and The xx.

A member survey of the global rights agency Merlin representing more than 20,000 indie labels including Beggars Group/XL Recordings, Rough Trade, Naïve, Tommy Boy, Cooking Vinyl and Naxos unveils that “92% of respondents saw streaming and subscription revenues grow between 2011 and 2012, with a third enjoying increases of more than 100%” as recently reported by Musicweek. The same study shows that 24% of indies across the world and 30% of European indies generated more income from streaming than downloads in 2012.

These figures suggest that music streaming seems to be a promising revenue source for record labels. In the following the economic potential of music streaming and the underlying business model are analysed from the record labels’ perspective.

“Download! How the Internet Transformed the Record Business” by music industry journalist Phil Hardy is a detailed analysis how the majors record companies lost control of the value added chain in the music industry in the digital revolution. He tells the story about self-confident and maybe arrogant music business executives, who had profited from the CD revolution in the 1990s, but were outmanoeuvred by industry outsiders who set up a totally new added value network for recorded music. The once highly profitable record business that attracted investors from other industries in the 1980s and 1990s turned into a laboratory of digitalization with declining record sales, job losses and divestments of pressing plants and distribution networks in the 2000s. “Download!” is, therefore, an important contribution to understand the impact of Internet and new media on the transformation of the recorded music industry.